Woman strolls through the Sodermalm area in Stockholm, Sweden October 22, 2020. Amir Nabizadeh/TT News Agency via REUTERS
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- Q1 GDP -0.8% qtr/qtr vs. PV estimate -0.4%
- YoY unchanged at 3.0% growth
STOCKHOLM, May 30 (Reuters) – Sweden’s economy slowed sharply in the first quarter of the year, data from the Statistics Office showed on Monday, confirming that the lingering impact of the pandemic and war in Ukraine have stunted growth.
Gross domestic product (GDP) contracted by 0.8% compared to the fourth quarter of 2021, revised down from the previous estimate of a 0.4% contraction. During the year, the economy grew 3%, unchanged from the previous estimate.
“The downturn was relatively broad, but negative net exports were the largest contributor,” Jessica Engdahl, department head at the Bureau of Statistics, said in a statement.
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Sweden’s trade balance was -1.8 billion kroner in April, separate data showed.
The country’s economy weathered the pandemic relatively well, but ongoing problems with shortages and supply shortages, made worse by Russia’s invasion of Ukraine, appear to be finally catching up with businesses.
In addition, households are feeling the pressure of rising inflation and are eyeing higher mortgage costs as a result of an expected series of rate hikes.
The central bank raised interest rates in late April and said it had to raise several more times this year and next keep inflation under control – at 6.4% in April.
Markets expect the Riksbank to be forced into even more aggressive monetary tightening than rate setters are currently planning.
Households have already turned gloomy as the latest survey shows consumer confidence at its lowest level since the 2008-2009 financial crisis, although retail sales are still holding up well.
In its latest forecast, the central bank lowered its growth forecast for this year to 2.8% from 3.6% and also lowered its expectations for the coming years.
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Reporting by Simon Johnson; Edited by Niklas Pollard
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